Ultrafine-grained Cu–5 vol%Al₂O₃ nanocomposite rods were fabricated by a combination of high-energy mechanical milling of Cu and Al₂O₃ powders and powder compact extrusion at 300, 500, 700 and 900 °C. The extruded rods were investigated to evaluate microstructures, mechanical properties, fracture behavior and electrical resistivity. It was found that the extrusion temperature has a pronounced effect on Cu grain growth, Al₂O₃ particle coarsening and particle distribution. High-temperature extrusion leads to directional coarsening of certain grains. As such, a heterogeneous matrix structure of large elongated and equiaxed grains is created, and this unique matrix structure brings beneficial effects in tensile ductility and electrical resistivity. While Al₂O₃ dispersions in the matrix improve the overall performance of the nanocomposite, an incorrect selection of the extrusion temperature may have detrimental effects on yield strength and resistivity. Tensile fractography investigation shows that the presence of Al₂O₃ results in failures along grain boundaries. This study also provides a framework for modeling the mechanical and electrical properties of such complex matrix structures. Modeling tools/formulae can be used to predict mechanical/electrical properties via microscopic characteristics and hence can also be used to understand the effect of processing variables.